Cloud services firm ESDS Software files for IPO

ESDS Software Solution Ltd, which provides cloud computing infrastructure as a service and software as a service, has filed draft documents (DRHP) with the Securities and Exchange Board of India to launch an initial public offering (IPO).

The IPO comprises a fresh issue of shares worth Rs 322 crore and an offer for sale of 2.15 crore shares by investors and promoters, according to the draft red herring prospectus filed with the capital markets regulator.

The selling shareholders include GEF ESDS Partners LLC, which is offloading 42.31 lakh shares; South Asia Growth Fund II LP, which is divesting 1.68 crore shares; South Asia EBT Trust (34,000 shares) and Sarla Prakashchandra Somani (4 lakh shares).

The company may also raise Rs 60 crore before the IPO either through a rights issue to existing shareholders, private placement or preferential offer. If it raises this amount, it will reduce the fresh issue size in the IPO proportionately.

ESDS Software will use Rs 155 crore out of the net proceeds from the fresh issue to buy cloud computing equipment for data centres. It will also use Rs 75 crore to finance its long-term working capital requirements and Rs 22 crore to repay debt.

The company
ESDS Software operates an asset-light business model that allows its clients to scale quickly and reduce the cost of operations. 

Its Infrastructure-as-a-service cloud computing services portfolio includes public cloud, private cloud, virtual private cloud, hybrid cloud and various community cloud offerings. Its indigenously developed vertical autoscaling technology, which powers its IaaS “eNlight Cloud”, is patented in the UK and the US.

As part of its SaaS offerings, it provides software products and applications, hosted on its cloud platform, on annual, semi-annual, monthly or quarterly subscription model. This allows its clients to develop, run and manage applications and services.

The company operates through three data centres—one each in Navi Mumbai, Nashik and Bengaluru. Its data centres cover, in aggregate, more than 50,000 square feet across the three locations.

It offers its services to government departments and companies across sectors such as financial services, technology, telecom, manufacturing, pharmaceuticals, real estate, retail and education. 

The company has clients in many countries across the Asia-Pacific, Europe, the Middle East, the Americas, and Africa. Its customers include Larsen & Toubro Ltd, Tech Mahindra Ltd, EDF India Pvt. Ltd, Software Technology Parks of India, EPL Ltd, Symphony Ltd, and US Technology International Pvt. Ltd.

ESDS clocked a profit of Rs 5.48 crore on revenue of Rs 171.93 crore for the financial year ended March 2021. This compares with a profit of Rs 0.94 crore on revenue of Rs 158.57 crore in the previous year.

Axis Capital and IIFL Securities are the book-running lead managers to the issue.